Where can you go for quality, free financial advice when you, a relative, or friend needs help with a big decision?

Money worries blight all of our lives at times, but it can be difficult to know where to turn when you have to deal with an unfamiliar financial challenge or emergency.

You might be an investing whizz but have very little practical experience in dealing with long-term care issues for a close family member, for example.

• Who can you trust?
• Where do you go for reliable information so that, even if you can pay for some help, you know that you’re receiving good advice?
• How do you avoid being scammed, fobbed off, or taken for a ride?

Below are sources of financial advice that I’ve found to be genuinely useful over the years, or else are widely considered to be a go-to frontline service for money-related problems.

Where can I find free financial advice?

The Money Helper Service (it used to be called Money Advice) is a national treasure when it comes to straightforward, free advice on most aspects of financial life. Go there for a 101 on pensions, long-term care, debt, redundancy, self-employment, housing, benefits, illness, disability, death, and divorce.

The Money Helper Service is a government-backed initiative.

I supplement and corroborate the Money Helper Service by also checking Citizens Advice and GOV.UK.

Inevitably you get a better handle on the issues by cross-checking multiple sources. This is also a good way of discovering wrinkles you’ll need to think about – or ask for more advice on – as you trim your decision tree.

It’s generally a good sign, too, when government, charities, professional bodies, and journalistic sources are all in agreement about the basic facts.

Free independent financial advice

Sooner or later many people need the help of a financial advisor to help them deal with complicated issues such as tax planning, estate planning, equity release, or defined benefit pension transfer.

Some financial advisors offer a free initial consultation. Obviously that’s no guarantee of quality – and it’s offered as a prelude to paid engagement – but at least it enables you to size up a few firms.

A number of unions have partnered with financial advisors to offer a free consultation. You’ll find some advisors make that available to anyone, regardless of affiliation. A Google search will reveal more.

Financial advisor comparison sites

More generally, there are free financial advisor match-making services.

Unbiased.co.uk pairs you with financial advisors, accountants, and mortgage brokers. It says its database will match you with an advisor who is independent, regulated, and qualified.

Vouchedfor.co.uk hooks you up with financial advisors, accountants, solicitors, and mortgage brokers. Vouched For includes reviews but you’ll need to check your advisor is independent. The site checks for qualifications and regulation.

Financial planner professional bodies

The Chartered Institute for Securities & Investment (CISI) administers qualifications for UK independent financial advisors (IFAs). Use its tool to search for advisors by postcode.

The Personal Finance Society (PFS) also enables you to search their membership for an advisor near you. Its tool includes a specialism function. The PFS is part of the Chartered Insurance Institute Group.

Later life specialists

The Society Of Later Life Advisors (SOLLA) enables you to search for a financial advisor who specialises in the domains of retirement planning, equity release, long-term care, inheritance tax planning, wills, and probate.

The Money Helper Service maintains a retirement advisor directory. These cover much the same specialisms as SOLLA and are regulated, but are not necessarily independent.

Note: no matter who you deal with, always check whether your financial advisor is independent. If they are restricted, check they’re restricted by their specialism, not because they are tied to particular product providers. And make sure you understand how much your IFA charges.

The Financial Services Register

Before you do business with any financial firm, check its bona fides on the Financial Services Register. This is your first port-of-call to ensure that you’re working with someone who is authorised to offer the services they’re advertising in the UK, and who is regulated by the Financial Conduct Authority or the Prudential Regulation Authority.

The regulators also maintain a list of black hats you may not wish to work with.

If you hope to be covered by the Financial Services Compensation Scheme (FSCS) then it’s essential you check your provider is UK regulated and also authorised to provide a service covered by the scheme.

There are FSCS loopholes that are likely to affect many Monevator readers.

Free financial dispute resolution

The Financial Ombudsman Service (FOS) offers free financial dispute resolution that enables you to seek redress against financial firms without going to court. The FOS handles consumer complaints involving bank, insurance, mortgage, financial advice, pensions, loan, and credit products.

You must be in dispute with a regulated firm to bring the FOS into play. You must have exhausted the firm’s internal complaints procedure first.

Happily, the FOS is independent, its rulings are legally enforceable, and it doesn’t preclude you going to court if you’re still dissatisfied.

There is also a Pensions Ombudsman, even though the FOS does handle some pension disputes.

Free pensions advice

If you have a defined contribution pension then you are entitled to a free appointment to talk through your options with a specialist from Pension Wise. You qualify for this service if you’re over 50-years old.

Pension Wise is also a good source of straightforward articles that guide you through the maze of pension complexity.

The Pensions Advisory Service offers general pension advice. You can contact it directly by phone and web chat to talk through your pension questions – although it does not provide financial advice.

Pension Wise and The Pensions Advisory Service fall under the auspices of The Money and Pensions Service (MaPS), which is sponsored by the Department for Work and Pensions. The MaPS also runs The Money Advice Service.

Free tax help

Ever found the tax system baffling? The Low Incomes Tax Reform Group (LITRG) is a wonderful resource featuring tax guides that won’t give you a banging headache.

The LITRG resources have been put together with genuine care by the Chartered Institute of Taxation (CIOT) – a trade body for UK tax professionals.

If you want help finding a paid tax professional then use CIOT’s1 find a member tool. You can search by tax specialism and location.

TaxAid have compiled some tips on choosing a tax advisor to make things a little easier.

Free tax help for those on lower incomes

TaxAid is a charity that helps people understand the tax system, pay the right amount of tax, and appeal unfair tax demands. Call its helpline if you need tax assistance and you earn less than £20,000 per year.

TaxAid is run and staffed by tax professionals.

Tax Help for Older People is similar to TaxAid but is specifically geared towards assisting the over-60s who earn less than £20,000 per year.

You can get tax advice from volunteer tax professionals including retired HMRC staff. Find out how they can help you or call them on 01308 488066.

Free debt advice

Thankfully there are a number of organisations dedicated to helping anyone worried about debt or bankruptcy.

The National Debtline provides free advice and resources for anyone in England, Wales and Scotland. It’s run by the Money Advice Trust.

Business Debtline is a sister service aimed at the self-employed and small businesses.

Go to AdviceNI for debt advice tailored for people living in Northern Ireland. (AdviceNI also helps with benefits and tax credits.)

You can find more online, telephone, and face-to-face debt help via the Money Helper Service resources page.

Debt advice, but also free guidance on other social issues

The following organisations can help you with debt, but they also cover many other life challenges including benefits, tax credits, council tax, social care, employment and redundancy, housing, and homelessness:

• Citizens Advice
• Step Change
• Advice Local provides links to organisations that are tailored to your location. It’s run by the Rightsnet charity.
• Age UK is a charity that specialises in later life advice on topics such as debt, money, legal, health, work, care, and support.

Free housing advice

Shelter is the leading charity for advice on housing issues including eviction, repossession, renting, deposits, benefits, and homelessness, if you live in Scotland, Wales, or England.

Go to Housing Advice NI if you live in Northern Ireland.

Free consumer rights advice

Most people will be familiar with these sources but I think that Which,2 Money Saving Expert and Citizens Advice are hard to beat when it comes to your consumer rights.

Free investing ideas

You could do a lot worse than browsing the articles at Monevator’s Passive Investing HQ. (Though it makes us blush to say it.)

Finally, the best two pieces of financial advice I ever got were:

• Kill all bad debt.
• Build an emergency fund to buffer you against bad financial luck.

You can have those for free!

Please let us know your favourite sources of free financial advice in the comments below. That way we’ll build up this resource using the wisdom of the Monevator crowd.

Take it steady,

The Accumulator

1. The Association of Taxation Technicians are in on the tool, too. [↩]
2. Obviously Which isn’t entirely free but it has lots of quality information outside its paywall. Moreover, good organisations need to make a living to maintain their service. [↩]

What caught my eye this week.

Being nothing if not a business nerd, I spent Friday evening enjoying a new report from Waitrose on consumer trends in 2021.

Don’t judge me! It’s not like the pubs were open. Or maybe they were? But I live alone. So I can’t go to them. Or maybe I can go? And sit on my own with a hearty meal? I’ve lost track.

Anyway, there was lots of food for thought in the Waitrose report, served up alongside all that ready-baked pun potential.

A few morsels:

• Waitrose dubs preparing dinner ‘the new commute’, with three-quarters of home workers using cooking to mark a divide between work and play.

• Some 69% of Waitrose shoppers think they’ll continue with online grocery shopping when normality returns.

• There’s been a 222% rise in interest in pickling.

• Rosé sales were up 57% year-over-year in Autumn, as the seasons went by in a blur.

• With coffee shops closed, sales of bean-to-cup machines rose 64%. (Here’s one I prepared earlier.)

• Cash transactions at Waitrose have fallen from 22% pre-pandemic to just 10% now.

• 58% of customers say they’ve secretly enjoyed the lack of pressure to go out.

As an active investor and stock picker, I’ve spent this year trying to divine what has changed and what has not in the wake of the virus.

I’m instinctively a skeptic of overnight societal shifts:

Nah. People love cities. Society is roughly never changed by one-off events. Americans I think particularly struggle with this. Europe saw major cities reduced to 2-foot of rubble in a WW2 and life return to normal. If (/when) technology changes things, it won’t be due to Covid.

— Monevator (@Monevator) November 23, 2020

I certainly don’t believe all those people who bought bean-to-cup coffee machines won’t soon be back in the cafes as much as before.

And I have to believe that the 58% of us who’ve enjoyed the freedom to lounge at home reading business reports on a Friday night will eventually feel the pressure to get back into the fray.

Cost conscious

What was most striking to me from the report though was what was not in it.

2020 was a year of economic turmoil, but you’d never have known it.

I’ve had a very good 2020, financially speaking, which is kind of depressing given what a rotten year it’s been. I kept my head in March and picked up bargains. This year to forget looks like being one to remember, seen through the heartless lens of returns.

It could have all gone differently, of course.

When The Accumulator wrote his seminal Do Not Sell post during the crash, he wasn’t thinking the market would bounce back within months. I guess it’s conceivable too that the vaccines wouldn’t have proven effective in trials, though that always seemed unlikely to me. There remains a risk we can’t vaccinate ahead of mutations, I suppose.

But one thing I would never have expected in March was that a supermarket could review this year without talk of shoppers cost-cutting, downshifting in brands, and buying in bulk to save money.

We now know it’s been a K-shaped recovery – the richer who shop at Waitrose have been far less affected by the economic tumult than those down the road at Tesco. But I’d still have expected financial hardship to at least feature, given the scale of the economic drawdown.

In many ways this is a clear positive. I posted in March that readers should prepare for a recession. We saw one, but for Waitrose shoppers – and I suspect most Monevator – readers it hardly felt like it.

However for me this gives a hint at the hard-to-fathom borrowings the country has taken on to soften the impact of Covid and its related disruptions.

The UK economy saw a record slump earlier this year. But unemployment didn’t soar and while there have been some bankruptcies, it seems small beans for anyone who was around in the 1980s, or even the early ’90s.

We rightly decided to offset the pain of this one-off and unforeseen external shock from the coronavirus. We can debate whether this or that anti-viral mandate was heavy-handed and made it worse, but it’s very hard to argue we shouldn’t have borrowed hard to keep the economy afloat.

The chancellor kicked tax rises down the road in his Spending Review. With the economy still shaky and bonkers Brexit imminent, that made sense.

But we will have to pay for all this one day. Something to think about when you’re next clicking for pickles at Waitrose.

Note: I expect we’ll discuss the economy in this week’s comments. Please keep it civil and on-topic. Virus-specific comment should go on our dedicated Covid thread. I get there’s a huge crossover but let’s try to keep this discussion finance and investment-related please, for wider reader enjoyment.

[continue reading…]

Most people are best off using index funds to achieve their investment goals. They do not have the edge required to beat the market, and most fund managers they’d pay to do so can’t either, especially after costs.

However some of us love the art of investing, a challenge, suffering, or just the thrill of trading shares. So we invest actively, despite the odds.

If you don’t mind that you’ll probably lag the market return, there are worse hobbies. Provided you’ve made adequate financial provision overall, of course.

A very few of us might believe – or even have the stats to show, if we squint a bit – that we do have a market-beating edge. This might make stock picking for us rational as well as intellectually rewarding.

Even then, as my friend Lars Kroijer often reminds me, it’s a good idea for any budding Warren Buffetts with a smaller than seven-figure portfolio not to think about what the time and effort of picking shares is costing in terms of an hourly rate. Or indeed the better job or business you could pursue instead of doing all that share research.

But you (hopefully) knew all that already.

10 easy ways to lose money trading shares

If you have the rare ability to pick investments better than the market – on average – or you have reason to want to try, you’ll still need good workaday habits to make your skill pay.

There are lots of big, hairy ways to lose money when investing in or trading shares and funds.

Rubbish investment selection is route one to a lousy result, no doubt.

Other common mishaps include getting scared into selling when shares fall for no real reason, or becoming over-confident and losing whatever discipline had been delivering for you. (Your biggest enemy in the market is you.)

Even if you master your emotions and make winning investments, you can still erode your returns by bleeding money through a bunch of bad habits.

Here are ten active investing mistakes that will eat away at your returns, and make beating that tracker fund even harder.

1. Paying high fees

There’s no reason to pay a lot to buy and sell shares today given the existence of no-cost share dealing from the likes of Freetrade.

Freetrade offers ISA, too, and a SIPP is on the way. With such tax shelters you can trade however you want without worrying about capital gains taxes or submitting paperwork to HMRC.

Even at traditional brokers, online dealing is cheap compared to the old days. Fees probably won’t be what determines your success once you have a big pot to invest.

Small active investors need to watch expenses like a hawk, however.

If your broker charges £15 to buy and sell shares, then a round trip will cost you £30 in fees. With an investment of £600, you’ve lost a whopping 5% on dealing fees, and more could be due on stamp duty, too. Even investors with edge will struggle to make up that friction.

Keep total dealing costs below 2.5% – and preferably far less. Use Freetrade or a similar low-to-no cost app to slash the price of entry.

If for some reason you do want to use a more traditional broker, then find a platform with a Sharebuilder type service that offers very low dealing fees (say £1.50) at set times, if you really must buy small quantities of shares.

2. Buying shares on wide spreads

The spread is the difference between the price you pay for a share, and the price you can sell at. Think of changing foreign currency at an airport booth as an analogy.

Even today you can find small cap shares on a five to 10% spread. You’d need the price of your investment to rise by at least that much just to break even – so you’re starting in the hole.

You must be especially confident a share is undervalued to buy on a large spread. Preferably you’d be in for the long haul to amortize away the initial cost over time.

Try using a Limit Order to buy such shares cheaper than the quoted price. Some brokers may claim higher dealing fees are justified by their ability to bag shares within the spread. Test them!

3. Fat-fingers making you buy the wrong share…

…or too many shares, or too few.

It happens! Online dealing has made trading cheap and easy, but if you’re too freewheeling you can slip up when placing your order.

Double check your trade is for the right shares after you’ve entered a ticker. It’s easy to make a mistake if you’re careless, especially when buying shares (or bonds) that have similar names, or multiple issues or classes.

With highly-priced or penny stocks, be careful to check you’re investing the correct amount. I’ve seen brokers fail to give the right price for some (admittedly typically obscure) shares until the final order screen.

4. Ignoring the tax implications of overseas holdings

I’m not going to begin to go into this vast subject here. Prior experience is that any attempt to do so will over-simplify this or overlook that. (And then someone will pop up in the comments and call me ignorant for not knowing there’s been a bilateral withholding tax refund treaty in place due to the legacy of the Statute of 1736 provided you deal in a SIPP on a Tuesday and send a copy of your birth certificate to a man in Panama.)

Do your own research on things like the tax implications of foreign dividends, the domiciles of different funds you own, and any circumstances specific to you, such as investing as an expat.

5. Being forced to deal due to tight stop losses

I don’t like stop losses very much unless you’re literally a day trader (and good luck with that) but I really don’t see the point in automatically selling shares if they drop by 3-5%.

Occasionally such a tight stop loss will prevent you taking a big hammering when a share plunges in price. Mostly you’ll just be selling because of market noise. You may quickly want to repurchase your shares – probably after they’ve risen again and you’re kicking yourself.

Trading fees can quickly mount like this, not to mention your blood pressure.

6. Ignoring liquidity

Shares that are thinly-traded can be a fertile hunting ground for small investors. They may be overlooked by professionals or untouchable for some reason, usually size. But they can come with a sting in the tail due to poor liquidity.

One sign of illiquidity is a wide spread. Another is that buying just a few thousand pounds worth of shares moves the price. Even little old me has moved the valuation of quoted companies by millions with small trades.

The price of illiquid shares can be as unpredictable as a former child star who has gone off the rails, so make sure you know why you’re invested to keep the faith. Don’t be overly worried by short-term movements if you’ve bought for the long-term.

Don’t even think about selling illiquid shares in a bad market. You’ll usually get a terrible price, followed by the pain of seeing the shares rebound when the market calms down.

7. Using too much leverage

This one is for the spreadbetters. Make sure you understand how the size of your bet per point equates to your total exposure to underlying share price moves.

Sensible folk who would never dare borrow £5,000 to buy shares can easily – and accidentally – rack up such exposure with their first spreadbet.

I’ve used spreadbetting in the past for specific reasons (and there can be tax advantages) but I’ve not done so for years. I believe most private investors are better off sticking to traditional investing.

8. Ignoring currency impacts

As a long-term passive investor in a diversified basket of global shares via funds, it’s a perfectly acceptable strategy to ignore currency fluctuations.1

If you’re an active investor operating tactically and over the shorter-term, you should pay more attention to currency movements – especially the US dollar, which tends to drive a lot of other variables in the market, from emerging market debt to the gold price to the cost of energy.

Surprise events such as the EU Referendum notwithstanding, major currency pairs tend to move fairly slowly. Certainly compared to the volatility of individual shares, which can drop by 50% or more in a day.

Over a few years though currency movements add up. For example, if you spot a particular emerging market is pursuing a pro-growth agenda and you buy into its shares for the long-term, you could do worse than expected if its authorities decide to boost competitiveness by slowly depreciating their currency 30-50% versus the pound and other global benchmarks.

Remember, it’s always the currency of the underlying assets that matter when you invest overseas.

9. Paying hefty active fund management fees

One useful outcome of trading shares is you’ll soon discover it’s harder to beat the market than it looks, so you won’t have to take our word for it.

That is, provided you properly track your returns (as opposed to fooling yourself).

At this point you should turn to passive investing and get a new hobby. But despite the odds, some people will still to try to beat the market by finding winning managed funds or investment trusts.

It’s a free country, and so long as you’re saving enough and not chasing quick returns, you can still achieve your goals with under-performing active funds, if you really must keep alive the small chance of doing better in the end.

Do make sure you appreciate the affect of fees on your returns, though.

• £100,000 invested for 20 years at a 10% return with annual fees of 1% compounds to £560,441.

• With a very slightly higher annual charge of 1.5%, you’ll end up with nearly £50,000 less.

It’s usually best to favour funds with lower fees – even active ones.

Fees buy active managers their sports cars. These managers are not bad people – most are fascinating company if you’ve got the sort of curious mind that’s drawn to active investing – and they work hard.

But as a group they fail to beat the market for the money we give them.

That’s inevitable, because active investing is a zero sum game.

10. Not using ISAs and pensions to shield yourself from tax

Paying taxes on your gains or dividends can savage your returns. There’s no excuse nowadays for not dealing within ISAs or a SIPP2.

The environment for unsheltered investing has got more hostile over the past few years, such as with the escalation of taxes on dividends. A hike in capital gains taxes has been mooted, too.

By all means ignore tax shelters if you want to give the State a big chunk of the gains you make for the risk and effort of investing in shares.

Personally I prefer to (and gladly) pay my share of taxes on my income, and to leave my investments to compound unmolested.

Beating the market is very hard. Don’t make it even harder for yourself by doing it on behalf of HMRC!

1. Any overseas fixed income investments, such as US government bonds, should usually be owned via a hedged ETF or similar. You can do the same with shares if you want to, at a potential small cost to your returns. [↩]
2. Self-Invested Personal Pension [↩]